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How to Start a Service Business on a Budget

April 3, 2023 13 min. read
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Starting a service business comes with plenty of perks. As a small business owner, you can escape the 9–5, work with your hands, be your own boss, and build a legacy for your family.

Your service-based business will also play an important role in your community. Whether you’re a cleaner, a contractor, or a landscaper, your services keep your neighbors’ homes safe, functional, and comfortable.

Don’t get us wrong, starting a new business is a challenge. That’s why we’re here—to help you start a service business and do it right from day one, without breaking the bank.

Read our guide before getting your business started, and watch this episode of Ask a Business Mentor to hear advice from experienced entrepreneurs:

1. Decide what type of home service business to start

There’s no better time to consider joining the home services industry. In the United States, this market is valued at an all-time high of $657 billion. It’s a high-potential area with lots of room for you.

All you need to do is decide which type of local services to offer—and there are plenty of ways to offer service as a business.

Below are some examples of what you can do as a home service provider.

2. Write a business plan

Once you know what type of service business to start, you need a business plan to help you get it up and running. Many lenders require business plans before they’ll consider funding your new venture.

Your business plan should include:

  • Cover page so your document is easy to recognize
  • Table of contents to help the reader move through the document
  • Executive summary to give the reader a quick summary of your business planning, including how much funding you need and your competitive advantage
  • Business overview introducing your business and explaining what you’ll provide, why, and for who
  • Services list showing which services you’ll offer to your customers
  • Pricing strategy, including prices for each of your services
  • Market analysis showing what the income potential is in your service area
  • Competitive analysis outlining competing businesses and what makes you stand out
  • Marketing plan for how you’ll reach ideal customers, including channels and costs
  • Employee planning showing what roles you’ll be hiring for and when
  • Financial projections, including how much you think you’ll make in the first year, what you can afford to spend on new equipment, and what you plan to pay yourself

READ MORE: How to create a small business budget (with free template)

Even if you don’t need a business plan to secure a loan, we still recommend making one. Don’t worry, this doesn’t have to be a formal plan. It’s more like a list of things to consider when starting a business.

Just open a blank document or grab a notebook, and write down the answers that come to mind. You can come back to this document and update it later if needed.

3. Get trades certified or learn on the job

You may need to get skilled trades certification or licensing before you can legally start doing business in your chosen trade. It all depends on the type of business you’re starting and where you live.

Here are a few examples of how trade certifications and requirements can vary in different states:

  • Electrical: A Texas electrician license is a requirement, but there are some exemptions for professionals working in areas like agriculture or appliance repair. On the other hand, you’ll need an electrician license in Massachusetts to perform any electrical work, period.
  • HVAC: An HVAC license in Florida can be for a registered or certified contractor, which determines where in Florida you can independently work. However, if you’re getting a Texas HVAC license, becoming a registered or certified technician still requires you to work under the supervision of a licensed contractor—you can’t run your own business.
  • Plumbing: North Carolina plumbing licenses include three license types and two technician sublicenses, based on the type of work you can do. Illinois plumbing licenses are similar, but they also offer a retired plumber license as proof of education for plumbers aged 62+.
  • Handyman: You don’t need a handyman license in California, but you can’t take on projects over $500. Handyman licensing in Florida is a little different—there’s no project value cap, but you need a contractor’s license for trade work like plumbing and electrical.

Some types of businesses, like cleaning or lawn care, are quick to start and don’t require formal skills training. All you need is equipment and a good work ethic—which is great for your budget.

If you’re doing a skilled trade like plumbing or electrical, you need to pass a certification exam and become a certified journeyperson (or, in some areas, at least a registered apprentice).

Make sure to check your local regulations before starting a business to make sure you have the required training. You can also check out our guides to appliance repair certificationHVAC certification, and plumbing certification.

4. Price your services

Write down a list of services you’ll offer your clients, along with a description of what each service includes. Make sure to account for any equipment or materials you need, and how long each job will take to complete.

Now you’re ready to price your services. You can pick a pricing model that’s common for your industry, or see which of these pricing strategies works best for your business:

  • Hourly rate: Charge your customers per hour of service
  • Flat rate: Charge a flat rate per job or unit
  • Square footage: Charge per square footage of job space

Whichever pricing strategy you choose, make sure you factor in your labor costs, overhead expenses, materials, markup, and profit margin.

FREE TOOL: Try our free service pricing calculator

You should also do market research to make sure you’re offering competitive pricing—but don’t copy competitors’ prices. They have different pricing factors that you don’t know about. Copying their fee structure could hurt your own business.

Pro Tip: Check out our industry-specific guides to writing a business services list, including cleaning serviceshandyman serviceslandscaping services, and plumbing services.

5. Get business financing

Plenty of entrepreneurs don’t have extra money they can use to get their new businesses up and running. If you need small business financing, check out options like:

  • Government funding: The U.S. Small Business Administration (SBA) has several funding programs to get you started, like small business loans and investment capital. The Government of Canada also offers business grants and financing.
  • Business loan: Head over to your local bank and apply for a small business loan or line of credit that you can pay back later. You may also be able to get a startup loan from someone you know, like a friend or family member who wants a stake in the business.
  • Credit cards: Many entrepreneurs get a business credit card to help with cash flow during startup. Choose a card with a low interest rate and a rewards program for every dollar spent. Make sure to pay off the card every month, too.
  • Jobber Grants: The Jobber Grants program offers $150,000 in available funding to recognize excellence in small home services businesses.
  • Equipment financing: Depending on where you buy your equipment, you may be able to get financing on larger purchases. You can also buy used equipment instead of new to further cut down on costs.

Pro Tip: Open a business bank account to keep your personal and company finances separate. This will make everything much easier when it’s time to file your taxes.

READ MORE: 30 small business tax deductions to save money when filing

6. Choose and register a business name

Your name is one of the most recognizable pieces of your service business brand. Take your time and choose a business name that’s easy to remember and helps you stand out from the competition.

START BRANDING: Create a logo in five minutes using Looka’s logo builder

Register your business

Next, you’ll need to register your service business through your local registry. Here’s what registration looks like in different countries:

Choose a business structure

The registration process will also require you to choose a business structure. Your options include:

  • Run your business alone as a sole proprietor (U.S., CA) or sole trader (UK, AU). This is a common business entity for solo entrepreneurs.
  • Have 2+ business partners to share leadership responsibilities. This is known as a partnership (U.S., CA, UK), or as a joint venture or co-operative (AU).
  • Reduce business risk and protect your personal assets by incorporating as a limited liability company or LLC (U.S.), corporation (CA), limited company or limited partnership (UK), or company (AU).

Pro Tip: Find out more about your country’s business structures and registration process by googling “COUNTRY + business registration.” You can also check with the business registration division of your local government.

Apply for a business license

After registration, apply for a business license so you can legally work in your area. Contact your local Chamber of Commerce or the Small Business Administration (SBA) to see what type of license you need.

You’ll also need an employer identification number (EIN) for any business structure other than a sole proprietorship. You can’t accurately file taxes with the Internal Revenue Service without it.

7. Get small business insurance

It’s a good idea to get small business insurance to protect your business in case of any accidents or unexpected problems. In fact, your state might even require it.

Here are the types of business insurance you’ll need, which you can get bundled together as a business owner’s policy:

  • General liability insurance to cover property damage and personal harm
  • Commercial property insurance for any damage to your office or equipment
  • Business income insurance to keep you running after an incident or disaster

You can also get additional insurance policies to provide coverage for different situations, like:

  • Commercial auto insurance for company vehicles
  • Workers’ compensation insurance in case an employee is injured on the job
  • Professional liability insurance to cover claims and lawsuits over professional mistakes
  • Product liability coverage if you make or distribute your own products
  • Employment practices liability insurance for claims related to hiring, managing, and firing workers
  • Crime insurance to keep your business stable after criminal situations
  • Cyber liability insurance in case of a security breach or private data leak
  • Key person insurance to keep the company running if you physically can’t work anymore
  • Commercial umbrella insurance for extra coverage on your other policies

Need more information about industry-specific insurance? Find out about cleaning insuranceHVAC insurance, and snow plow insurance.

8. Market your service business

Your business is ready to roll—all you need is a client list. Try these marketing ideas to reach and attract potential customers:

  • Social media is a common marketing space for home service professionals. Set up a Facebook business page, Twitter profile, or Instagram account, depending on where your ideal customers spend time online.
  • Build a service business website where a potential customer can learn about your business, see photos of completed jobs, and book services online.
  • List your business on Google Business, Yelp for Business, Bing Places, and other online directories where potential customers search for service providers.
  • Network with other business owners and reach new customer groups by attending community events, joining your local business association, and promoting your business every chance you get.
  • Word of mouth is the top marketing channel for home service businesses. Start a customer referral program and ask every happy customer to leave you an online review.

You could also consider getting business cards, a vehicle wrap, uniforms, and referral flyers. These types of branded materials can help your business look more polished and professional.

Do your market research and keep track of your marketing strategy in your business plan. Over time, you can start to add tactics like Google search or Local Services ads, Facebook ads, postcard and email marketing, content marketing, and more.

9. Grow your service business

You’re out there doing the work every day and getting paid for it. But do you know how to run a successful service business? The answer is simple—maintain a growth mindset.

Business growth takes many forms. Usually it means adding people or processes to your operations. Here are some ways to grow and run a business successfully:

  • Hire employees who can help with and eventually take over day-to-day work. As a small business owner, hiring your first employee gives you the freedom to work on your business instead of in it. (Check out our guides to hiring cleaners and hiring lawn care employees and landscapers.)
  • Expand your customer base by reaching new customers in a new market. This could be offering services tailored to a new demographic. For example, a cleaning company can also offer laundry services for busy clients.
  • Keep learning with professional development resources like books and podcasts, as well as educational events like Jobber Summit. This will help you develop skills like time management, financial literacy, leadership, team building, and more.
  • Create systems and standard operating procedures that will make your business run better, prevent costly mistakes, and allow you to make more money with less effort. You could consider using automated technology such as Hatch to connect with leads instantly and boost close rates.

For example, your job management process might look something like this simple checklist that anyone can follow:

READ MORE: 5 ways to write better customer service follow-up emails

Don’t worry if you feel overwhelmed by this list of things needed to start a small business. Nobody expects you to learn it all overnight.

Take it one day and one decision at a time, build a community of peers around you, and keep a growth mindset. That’s how to start a service business you can be proud of.

Originally published May 2016. Last updated August 22, 2022.

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